Through careful selection of our market niches and strategic investment in people development, international expansion and innovation we aim to achieve organic growth in excess of our blended market growth rate, broadly matching revenue and profit growth in the medium term. We buy companies with business and market characteristics similar to those of existing Halma operations. Acquired businesses have to be a good fit with our operating culture and strategy in addition to being value-enhancing financially.
Acquisition profit growth %
Acquisition profit growth measures the annualised profit (net of financing costs) from acquisitions made in the year, measured at the date of acquisition, expressed as a percentage of prior year profit. Previously, the KPI was based on the annualised profit contributions from the current year’s and prior year’s acquisitions.
Acquisition profit exceeded our target of 5% for the year following a record spend of £193m on four acquisitions. 2016 was an excellent year for acquisitions, financed through our strong cash flow and increased debt facilities.
Acquisitions must meet our demanding criteria and we continue to have a strong pipeline of opportunities to meet our 5% growth target.
Growth in acquired profit is the second
key element of the economic value added performance which forms the basis of the annual bonus plan, requiring consistent annual and longer-term growth, rewarding disciplined financial performance.